Child Identity Theft Study

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Child Identity Theft Study

Conducted by

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Key Findings

What is at Stake for Victims of Child Identity Theft?

Victims of child identity theft are at significantly higher risk when the fraud is not discovered until the child is turned down for credit. Fraud victims who discovered the fraud when they were turned down for credit took more than three months longer than the average victim to discover the fraud and suffered four times the consumer cost ($3,078 vs. $691 on average).3 These victims also spent 61 hours resolving almost $10,000 in fraudulent debt. When the fraud is detected within three months, 75% of victims will spend nothing out of their pockets and most will spend less than three hours of their own time resolving the fraud. When swift action is taken upon the discovery of child identity theft, both parents and children can move past this experience more quickly and with less worry.

What Types of Problems are Occurring with Children’s Identities?

The Child Identity Theft Study examined 500 children’s social security numbers and credit histories and discovered 26 children with problems ranging from credit files with wrong names, debt, foreclosures, and medical bills already in collections. Among this 5% of children with credit file problems, victims averaged $12,779 in debt already listed on their credit report. Overall, 3% of the participants experienced fraud, while another 2% experienced problems in their credit histories that were not associated with fraud but would prevent a child from having clear ownership of their SSN. 3_{2008 Identity Fraud Survey Report: Identity Fraud Continues to Decline, But Criminals More Effective at Using All Channels, Javelin} Strategy & Research, February 2008.

54% 23% 23% Fraud commited

Credit report falsely created but no fraud discovered yet Parent's bills or information listed but in the child's name

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Key Findings, Cont.

Who is at Risk of Child Identity Theft?

While the study found that children were more likely to find problems in their credit histories as they aged, an astonishing 12% of those with problems were age 5 and under. The potential damage involving a very young child is high, especially because the misuse is likely to go on undetected for a longer period of time. Not all of the children found with credit file problems were victims of identity theft, but 54% of these children had confirmed fraud in their credit histories. However, children who were not victims of identity theft are at still at risk, due to the possibility of the legitimate bills belonging to their parents (but listed under their names) ending up in collections. Even these children could have their credit histories tarnished before they become an adult due to wrongly assigned bills.

Even very Young Children are Affected by Identity Theft

12% 31% 23% 35% 0% 5% 10% 15% 20% 25% 30% 35% 40%

5 years and younger 6 to 10 years 11 to 14 years 15 to 18 years

Distribution of Children by Age (Those with Identity Theft)

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Key Findings, Cont.

What Identity Theft Problems were Experienced by these Children, and How Extensive was

the Damage?

The damage caused by child identity theft can vary from a single fraudulent bill in collections to a foreclosed mortgage. The Child Identity Theft Study found that on average, children with problems in their credit histories saw $12,779 in fraudulent or wrongly assigned debt. In one of these cases the child’s SSN was associated with over $325,000 in debt. For 62% of the cases, an SSN was attached to a different identity and the child will not be able to use his or her SSN until the discrepancy is resolved. One in four victims in the study had bills or lines of credit in collections or foreclosure, while almost two‐thirds of the children had fake or wrong names listed under their SSN. One child’s SSN had seven identities associated with it, with several thousand dollars in medical bills, apartment rentals and credit accounts in collections. Child identity theft problems can be even more serious than the average identity theft incident experienced by an adult. If the case of adult identity theft, victims would spend more than 43 hours of their own time resolving the fraud and more than $1,300 to recover their good names.4_{Considering the cases of child identity theft revealed by} the study, criminals would have obtained twice as much in goods and services using the victim’s information compared to the average adult identity theft victim.

Child ID Theft can Result in Severe Problems, such as Foreclosures and Lines of Credit

62% 23% 15% 12% 8% 4% 0% 20% 40% 60% 80%

Fake or wrong names on credit report

Foreclosures or collections

Medical bills

Credit cards, loans and lines of credit

Utilities opened

Obtained housing

N = 26 Base: Children with credit file problems

Percent of Children with Credit File Problems

Types of Issues among Children’s Credit Files

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Protecting Your Child From Identity Theft

resolving any credit problems before they worsen. Ensure any protection products will notify you if your child has a credit history so that you can begin taking steps right away. • Restoration services: The task of restoring your child’s good name can be more than a parent can handle at times. Last year, victims of new‐account fraud spent almost 50 hours of their own time resolving the issues created by identity theft.5 Choose a service that can take some of that burden from you to allow you concentrate on your family. • Identity theft insurance: Identity theft insurance will help victims recover the cost of resolving your child’s good name, such as lost wages due to taking time off, fees for government applications and postage. These expenses can be financially significant in the worst cases of identity theft.

What Products are out There to Protect Your Family? (Continued)

5 _{2008 Identity Fraud Survey Report: Identity Fraud Continues to Decline, But Criminals More Effective at Using All Channels, Javelin} ID Protection Companies

Product Features Debix

Family Secure

Identity

Force Lifelock Trusted ID

Cost per child (without paying

for an adult) $20 Not supported Not supported Not supported Not supported Total cost for a family

(2 adults, 2 children) $88 $239 $179 $160 $190

Continuously monitors for use

of your child's SSN 9

Finds accounts at:

Equifax 9 9 Experian 9 TransUnion 9 Utilities databases 9 Public Records 9 Monitoring chat rooms 9 Orders reports (if they exist)

Credit report, public records Credit report, SSA Credit report, SSA, public records, medical benefits

Notifies parents when

problems found Phone E-mail Phone

Restoration services 9 9 9 9 9

Suppress credit file

(if one exists) 9 9 9 9 9

Engages law

enforcement to pursue cases”

9

Set fraud alerts 9 9 9

Product guarantee $2 Million $1 Million $1 Million

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